RBI likely to maintain status quo on April 1

Besides outlook on inflation, the central bank would also take into account the strengthening rupee and its impact on exports, she added.

Strengthening of the rupee against dollar in the past few days following inflow of foreign currency has put pressure on exports. In addition, unseasonal rains during this month may stoke food inflation in the near term.

The RBI is scheduled to announce its annual monetary policy for 2014-15 on April 1.

RBI likely to maintain status quo on April 1

He increased it again for a third time since he took charge, in January, when the market was expecting a pause.

It can be noted that even though the RBI has not formally adopted inflation targeting, it has gone public on targeting consumer price inflation down to 8 per cent by January 2015 and further down to 6 per cent by January 2016, as per the recommendations of the Patel committee.

According to SBI's economic research department, the present economic situation did not warrant any rate hike in the forthcoming monetary policy announcement for FY'15.

However, since RBI has surprised the markets in past few policies, there is a possibility of rates going either side, but with a larger probability of a rate hike, the report said.

Image: A school girl holds the Indian tricolour aloft at a rally in Kolkata.Photographs: Jayanta Shaw/Reuters